Returns One Can Only Dream Of

When I heard about Bitcoin for the very first time in May of 2011, it traded at eight US dollars.

As I write this, almost exactly six years later on May 20 2017, it has broken through the USD 2,000 barrier for the first time [ed. note: since then it has streaked even higher].

Bitcoin, daily: just four trading days after breaking through the USD 2,000 level, Bitcoin reached a peak of USD 2,760 – click to enlarge.

If I had invested USD 1,000 when I first became aware of it, I would have made a profit of USD 250,000 – the kind of return one can normally only dream of!

Consider though that prior to that juncture, the price had already increased by a factor of 160 within just a few months, as it stood at a mere 5 cents in July 2010.

USD 1,000 invested at that time would have become USD 40 million in less than seven years!

Bitcoin Exhibits a Pronounced Phase of Weakness in the Summer

In view of such staggering gains, many investors are probably wondering whether they should sell their Bitcoin.

Let us take a look at what the seasonal statistics have to say about that.

The chart below depicts the average price pattern of Bitcoin over the course of a year. The horizontal axis denotes the time of the year, the vertical axis the level of the seasonal index (i.e., the average value of Bitcoin indexed to 100 at the beginning of the year).

As you can see, the price of Bitcoin does tend to fall prey to the summer doldrums: in the period highlighted in dark blue from June 8 to October 6, it enters a pronounced seasonal downtrend.

Optimal Seasonal Time Periods in Bitcoin

The average price loss between June 8 and October 6 over the past seven years was 22.18 percent. That is equivalent to a relatively high 55.23 percent annualized.

Just how weak this phase is becomes even more obvious if one compares it to the seasonally strong time period: Bitcoin conversely rose by an average of 494.74 percent between October 6 and June 8. On an annualized basis this is equivalent to a stunning profit of 1,326.86 percent!

From a Seasonal Perspective, it is Time to Sell

In the weak seasonal period highlighted above, losses were recorded in three of the seven years since 2010. These losses reached up to 60.46 percent – in short, the risk is quite substantial.

Thus, from a seasonal perspective, it is now time to sell Bitcoin. Performance in the summer months was to date particularly poor relative to the rest of the year, during which Bitcoin on average delivered extremely strong performance.

PS: Charts showing the seasonality of many other financial instruments are available at my web site www.seasonalcharts.com at no cost. Alternatively, if you have access to Bloomberg or Thomson-Reuters, you can also use the Seasonax app.

Charts by: CryptoWatch, Seasonax

Addendum: The Seasonax App Special

Dear Readers,

We are able to offer a special treat for those of you with access to either a Bloomberg Terminal or the Thomson-Reuters Eikon software. Seasonax currently has a special offer for new subscribers: in addition to a free one month trial, one currently gets a three month money back guarantee as well. In other words, there is nothing to lose, and one gets more than enough time to test the app extensively. If you realize after a few months that it is not for you, it won’t cost you anything – you just wave good-bye with a single email. Of course, chances are that most of you who try the app won’t want to do without it anymore – not least because you will very likely find out that it pays for itself very quickly – a single trade may well be all it takes.

As you probably know, we are a bit like Hydra – our agents are everywhere, and we know everyone and everything – the “Even Deeper State”, so to speak. So it should be no surprise to you that if you place an order for the app through Acting Man, you will qualify for an additional life-time discount that is at this time only available through us. Details are available on request at info@acting-man.com (please write “Seasonax” in the subject line).

Dimitri Speck specializes in pattern recognition and trading systems development. He founded Seasonax and publishes the website www.SeasonalCharts.com, which features free-of-charge seasonal charts for interested investors. In his book The Gold Cartel (published by Palgrave Macmillan, see link on the right hand side), commodities expert Dimitri Speck discusses gold price manipulation and modern-day credit excess. His commodities trading strategy Stay-C has won awards all over Europe. He is the publisher of the web site Seasonal Charts as well as of the Bloomberg app Seasonax and Head Analyst of the 90 Tage Trader Letter.

You may have noticed that our so-called “semiannual” funding drive, which started sometime in the summer if memory serves, has seamlessly segued into the winter. In fact, the year is almost over! We assure you this is not merely evidence of our chutzpa; rather, it is indicative of the fact that ad income still needs to be supplemented in order to support upkeep of the site. Naturally, the traditional benefits that can be spontaneously triggered by donations to this site remain operative regardless of the season - ranging from a boost to general well-being/happiness (inter alia featuring improved sleep & appetite), children including you in their songs, up to the likely allotment of privileges in the afterlife, etc., etc., but the Christmas season is probably an especially propitious time to cross our palms with silver.
A special thank you to all readers who have already chipped in, your generosity is greatly appreciated. Regardless of that, we are honored by everybody's readership and hope we have managed to add a little value to your life.

Most read in the last 20 days:

Effects of Monetary Pumping on the Real World
As long time readers know, we are looking at the economy through the lens of Austrian capital and monetary theory (see here for a backgrounder on capital theory and the production structure). In a nutshell: Monetary pumping falsifies interest rate signals by pushing gross market rates below the rate that reflects society-wide time preferences; this distorts relative prices in the economy and sets a boom into motion – which is characterized by...

“Literally On Fire”
This week brought forward more evidence that we are living in a fabricated world. The popular story-line presents a world of pure awesomeness. The common experience, however, falls grossly short.
There are many degrees of awesomeness, up to total awesomeness – which is where we are these days, in the age of total awesomeness, just a short skip away from the Nirvana era. What is Nirvana, you may wonder? We only know for sure that Nirvana is what...

A Useful Public Service
There are nooks and corners in every city where talk is cheap and scandal is honorable. The Alley, in Downtown Los Angeles, is a magical place where shrewd entrepreneurs, shameless salesmen, and downright hucksters coexist in symbiotic disharmony. Fakes, fugazis, and knock-offs galore, pack the roll-up storefronts with sparkle and shimmer.
The Alley in LA – in places such as this, consumers are as a rule well served by applying a little bit of...

Moribund Meandering
Earlier this week, the USD gold price was pushed rather unceremoniously off its perch above the $1300 level, where it had been comfortably ensconced all year after its usual seasonal rally around the turn of the year. For a while it seemed as though the $1,300 level may actually hold, but persistent US dollar strength nixed that idea. Previously many observers (too many?) expected gold to finally break out from its lengthy consolidation pattern, but evidently the...

A Movie We Have Seen Before – Repatriation Effect?
There was a sizable increase in the year-on-year growth rate of the true US money supply TMS-2 between February and March. Note that you would not notice this when looking at the official broad monetary aggregate M2, because the component of TMS-2 responsible for the jump is not included in M2. Let us begin by looking at a chart of the TMS-2 growth rate and its 12-month moving average.
The y/y growth rate of TMS-2...

Waiting for Permanent Backwardation
The price of gold dropped 9 bucks, while that of silver rose 3 cents. Readers often ask us if permanent backwardation (when gold withdraws its bid on the dollar) is still coming. We say it is certain (unless we can avert it by offering interest on gold at large scale). They ask is it imminent, and we think this is with a mixture of fear and longing for a higher gold price.
Lettuce hope this treasure is not cursed... but it probably is....

Shill Alarm
One well-known commentator this week opined about the US health care industry:
“...the system is designed the churn and burn... to push people through the clinics as quickly as possible.
The standard of care now is to prescribe some medication (usually antibiotics) and send people on their way without taking the time to conduct a comprehensive examination.”
From the annals of modern health care... [PT]
Nope. That is not the standard...

In Other Global Markets the “Turn-of-the-Month” Effect Generates Even Bigger Returns than in the US
The “turn-of-the-month” effect is one of the most fascinating stock market phenomena. It describes the fact that price gains primarily tend to occur around the turn of the month. By contrast, the rest of the time around the middle of the month is typically far less profitable for investors.
Good vs. bad seasonal timing... [PT]
The effect has been studied...

Tightening Credit Markets
Daylight extends a little further into the evening with each passing day. Moods ease. Contentment rises. These are some of the many delights the northern hemisphere has to offer this time of year. As summer approaches, and dispositions loosen, something less amiable is happening. Credit markets are tightening. The yield on the 10-Year Treasury note has exceeded 3.12 percent.
A change in pace: yields are actually going somewhere. There is...

Voting with their Feet
A couple of recent articles have once more made the case, at least implicitly, for political decentralization as the only viable path which will begin to solve the seemingly insurmountable political, economic, and social crises which the Western world now faces.
Fracture lines – tax and regulatory competition allows people to “vote with their feet” - and they certainly do. [PT]
In the last few months, over 3,000 millionaires have...

Gold Lending and Arbitrage
There was no rise in the purchasing power of gold this week. The price of gold fell $22, and that of silver $0.19. One question that comes up is why is the fundamental price so far above the market price? Starting in January, the fundamental price began to move up sharply, and the move sustained through the end of April.
1-month LIBOR (London Interbank Offered Rate – the rate at which banks lend euro-dollars to each other). LIBOR and GOFO...

A Truism that is Demonstrably True
Most people are probably aware of the adage “sell in May and go away”. This popular seasonal Wall Street truism implies that the market's performance is far worse in the six summer months than in the six winter months. Numerous studies have been undertaken in this context particularly with respect to US stock markets, and they confirm that the stock market on average exhibits relative weakness in the summer.
Look at the part we...